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Indefinite LQ optimal control with process state inequality constraints for discrete-time uncertain systems
Analysis of the Newsboy Problem subject to price dependent demand and multiple discounts
1. | School of business administration, Zhongnan university of economics and law, 182 Nanhu Avenue, East Lake High-tech Development Zone, Wuhan 430073, China |
2. | OASIS -ENIT, University of Tunis El Manar, BP 37, LE BELVEDERE 1002 TUNIS, Tunisia |
3. | LGI, Centrale Supelec, Paris Saclay University, Grande Voie des Vignes, 92295 CHATNAY-MALABRY CEDEX, France |
Existing papers on the Newsboy Problem that deal with price dependent demand and multiple discounts often analyze those two problems separately. This paper considers a setting where price dependence and multiple discounts are observed simultaneously, as is the case of the apparel industry. Henceforth, we analyze the optimal order quantity, initial selling price and discount scheme in the News-Vendor Problem context. The term of discount scheme is often used to specify the number of discounts as well as the discount percentages. We present a solution procedure of the problem with general demand distributions and two types of price-dependent demand: additive case and multiplicative case. We provide interesting insights based on a numerical study. An approximation method is proposed which confirms our numerical results.
References:
[1] |
F. J. Arcelus, S. Kumar and G. Srinivasan,
Channel coordination with manufacturer's return policies within a newsvendor framework, 4OR, 9 (2011), 279-297.
doi: 10.1007/s10288-011-0160-1. |
[2] |
F. Y. Chen, H. Yan and L. Yao,
A newsvendor pricing game, IEEE Transactions on Systems, Man, and Cybernetics, 34 (2004), 450-456.
doi: 10.1109/TSMCA.2004.826290. |
[3] |
W. Chung, S. Talluri and R. Narasimhan,
Optimal pricing and inventory strategies with multiple price markdowns over time, European Journal of Operational Research, 243 (2014), 130-141.
doi: 10.1016/j.ejor.2014.11.020. |
[4] |
G. Gallego and I. Moon, The distribution free newsboy problem: review and extensions, The Journal of the Operational Research Society, 44 (1993), 825-834. Google Scholar |
[5] |
S. Karlin and C. R. Carr, Prices and Optimal Inventory Policy Studies in Applied Probability and Management Science. Stanford University Press, 1962. Google Scholar |
[6] |
M. Khouja,
The newsboy problem under progressive multiple discounts, European Journal of Operational Research, 84 (1995), 458-466.
doi: 10.1016/0377-2217(94)00053-F. |
[7] |
M. Khouja, The newsboy problem with progressive retailer discounts and supplier quantity discounts, Decision Sciences, 27 (1996), 589-599. Google Scholar |
[8] |
M. Khouja,
Optimal ordering, discounting, and pricing in the single-period problem, International Jounal of Production Economics, 65 (2000), 201-216.
doi: 10.1016/S0925-5273(99)00027-4. |
[9] |
M. Khouja and A. Mehrez,
A multi-product constrained newsboy problem with progressive multiple discounts, Computers and Industrial Engineering, 30 (1996), 95-101.
doi: 10.1016/0360-8352(95)00025-9. |
[10] |
A. Lau and H. Lau,
The newsboy problem with price-dependent demand distribution, IIE Transactions, 20 (1998), 168-175.
doi: 10.1080/07408178808966166. |
[11] |
E. S. Mills,
Uncertainty and price theory, the Quarterly Journal of Economics, 73 (1959), 116-130.
doi: 10.2307/1883828. |
[12] |
L. H. Polatoglu,
Optimal order quantity and pricing decisions in single-period inventory systems, International Journal of Production Economics, 23 (1991), 175-185.
doi: 10.1016/0925-5273(91)90060-7. |
[13] |
Y. Qin, R. Wang, A.J. Vakharia, Y. Chen and M.M. H. Seref,
The newsvendor problem: Review and directions for future research, European Journal of Operational Research, 213 (2011), 361-374.
doi: 10.1016/j.ejor.2010.11.024. |
[14] |
S.A. Raza,
A distribution free approach to newsvendor problem with pricing, 4OR, 12 (2014), 335-358.
doi: 10.1007/s10288-013-0249-9. |
[15] |
S.S. Sana,
Price sensitive demand with random sales price-a newsboy problem, International Journal of Systems Science, 43 (2012), 491-498.
doi: 10.1080/00207721.2010.517856. |
[16] |
K.-H. Wang and C.-T. Tung,
Construction of a model towards {EOQ} and pricing strategy for gradually obsolescent products, Applied Mathematics and Computation, 217 (2011), 6926-6933.
doi: 10.1016/j.amc.2011.01.100. |
[17] |
L. R. Weatherford and P. E. Pfeifer,
The economic value of using advance booking of orders, Omega, 22 (1994), 105-111.
doi: 10.1016/0305-0483(94)90011-6. |
[18] |
H. Yu and J. Zhai,
The distribution-free newsvendor problem with balking and penalties for balking and stockout, Journal of Systems Science and Systems Engineering, 23 (2014), 153-175.
doi: 10.1007/s11518-014-5246-9. |
[19] |
Y. Zhang, X. Yang and B. Li,
Distribution-free solutions to the extended multi-period newsboy problem, Journal of Industrial and Management Optimization, 13 (2017), 633-647.
doi: 10.3934/jimo.2016037. |
show all references
References:
[1] |
F. J. Arcelus, S. Kumar and G. Srinivasan,
Channel coordination with manufacturer's return policies within a newsvendor framework, 4OR, 9 (2011), 279-297.
doi: 10.1007/s10288-011-0160-1. |
[2] |
F. Y. Chen, H. Yan and L. Yao,
A newsvendor pricing game, IEEE Transactions on Systems, Man, and Cybernetics, 34 (2004), 450-456.
doi: 10.1109/TSMCA.2004.826290. |
[3] |
W. Chung, S. Talluri and R. Narasimhan,
Optimal pricing and inventory strategies with multiple price markdowns over time, European Journal of Operational Research, 243 (2014), 130-141.
doi: 10.1016/j.ejor.2014.11.020. |
[4] |
G. Gallego and I. Moon, The distribution free newsboy problem: review and extensions, The Journal of the Operational Research Society, 44 (1993), 825-834. Google Scholar |
[5] |
S. Karlin and C. R. Carr, Prices and Optimal Inventory Policy Studies in Applied Probability and Management Science. Stanford University Press, 1962. Google Scholar |
[6] |
M. Khouja,
The newsboy problem under progressive multiple discounts, European Journal of Operational Research, 84 (1995), 458-466.
doi: 10.1016/0377-2217(94)00053-F. |
[7] |
M. Khouja, The newsboy problem with progressive retailer discounts and supplier quantity discounts, Decision Sciences, 27 (1996), 589-599. Google Scholar |
[8] |
M. Khouja,
Optimal ordering, discounting, and pricing in the single-period problem, International Jounal of Production Economics, 65 (2000), 201-216.
doi: 10.1016/S0925-5273(99)00027-4. |
[9] |
M. Khouja and A. Mehrez,
A multi-product constrained newsboy problem with progressive multiple discounts, Computers and Industrial Engineering, 30 (1996), 95-101.
doi: 10.1016/0360-8352(95)00025-9. |
[10] |
A. Lau and H. Lau,
The newsboy problem with price-dependent demand distribution, IIE Transactions, 20 (1998), 168-175.
doi: 10.1080/07408178808966166. |
[11] |
E. S. Mills,
Uncertainty and price theory, the Quarterly Journal of Economics, 73 (1959), 116-130.
doi: 10.2307/1883828. |
[12] |
L. H. Polatoglu,
Optimal order quantity and pricing decisions in single-period inventory systems, International Journal of Production Economics, 23 (1991), 175-185.
doi: 10.1016/0925-5273(91)90060-7. |
[13] |
Y. Qin, R. Wang, A.J. Vakharia, Y. Chen and M.M. H. Seref,
The newsvendor problem: Review and directions for future research, European Journal of Operational Research, 213 (2011), 361-374.
doi: 10.1016/j.ejor.2010.11.024. |
[14] |
S.A. Raza,
A distribution free approach to newsvendor problem with pricing, 4OR, 12 (2014), 335-358.
doi: 10.1007/s10288-013-0249-9. |
[15] |
S.S. Sana,
Price sensitive demand with random sales price-a newsboy problem, International Journal of Systems Science, 43 (2012), 491-498.
doi: 10.1080/00207721.2010.517856. |
[16] |
K.-H. Wang and C.-T. Tung,
Construction of a model towards {EOQ} and pricing strategy for gradually obsolescent products, Applied Mathematics and Computation, 217 (2011), 6926-6933.
doi: 10.1016/j.amc.2011.01.100. |
[17] |
L. R. Weatherford and P. E. Pfeifer,
The economic value of using advance booking of orders, Omega, 22 (1994), 105-111.
doi: 10.1016/0305-0483(94)90011-6. |
[18] |
H. Yu and J. Zhai,
The distribution-free newsvendor problem with balking and penalties for balking and stockout, Journal of Systems Science and Systems Engineering, 23 (2014), 153-175.
doi: 10.1007/s11518-014-5246-9. |
[19] |
Y. Zhang, X. Yang and B. Li,
Distribution-free solutions to the extended multi-period newsboy problem, Journal of Industrial and Management Optimization, 13 (2017), 633-647.
doi: 10.3934/jimo.2016037. |









test | n | b | ||||
1 | 4 | 6 | 2 | 10.20 | 55.8 | 249.0 |
2 | 4 | 6 | 4 | 10.18 | 55.9 | 246.9 |
3 | 4 | 6 | 6 | 10.24 | 56.1 | 245.0 |
4 | 4 | 6 | 8 | 10.23 | 56.9 | 243.4 |
5 | 4 | 8 | 2 | 8.54 | 50.4 | 153.3 |
6 | 4 | 8 | 4 | 8.58 | 49.8 | 151.6 |
7 | 4 | 8 | 6 | 8.59 | 49.6 | 150.2 |
8 | 4 | 8 | 8 | 8.57 | 50.0 | 148.6 |
9 | 4 | 10 | 2 | 6.60 | 46.3 | 95.0 |
10 | 4 | 10 | 4 | 6.64 | 44.5 | 94.3 |
11 | 4 | 10 | 6 | 6.64 | 44.3 | 93.6 |
12 | 4 | 10 | 8 | 6.61 | 44.6 | 92.2 |
13 | 5 | 6 | 2 | 11.41 | 56.6 | 263.9 |
14 | 5 | 6 | 4 | 11.51 | 56.4 | 262.0 |
15 | 5 | 6 | 6 | 11.47 | 56.7 | 260.2 |
16 | 5 | 6 | 8 | 11.54 | 57.4 | 258.2 |
17 | 5 | 8 | 2 | 8.81 | 51.9 | 159.8 |
18 | 5 | 8 | 4 | 8.71 | 50.9 | 158.6 |
19 | 5 | 8 | 6 | 8.75 | 50.8 | 157.4 |
20 | 5 | 8 | 8 | 8.81 | 51.2 | 155.8 |
21 | 5 | 10 | 2 | 7.09 | 45.7 | 100.1 |
22 | 5 | 10 | 4 | 7.06 | 45.0 | 99.8 |
23 | 5 | 10 | 6 | 7.01 | 45.1 | 98.8 |
24 | 5 | 10 | 8 | 7.09 | 45.3 | 97.6 |
25 | 6 | 6 | 2 | 11.90 | 57.6 | 271.5 |
26 | 6 | 6 | 4 | 11.90 | 57.2 | 270.0 |
27 | 6 | 6 | 6 | 11.88 | 57.5 | 268.3 |
28 | 6 | 6 | 8 | 12.0 | 58.2 | 266.3 |
29 | 6 | 8 | 2 | 8.91 | 52.6 | 164.5 |
30 | 6 | 8 | 4 | 8.91 | 51.5 | 163.7 |
31 | 6 | 8 | 6 | 8.94 | 51.6 | 162.6 |
32 | 6 | 8 | 8 | 8.91 | 52.1 | 161.0 |
33 | 6 | 10 | 2 | 7.16 | 44.8 | 103.8 |
34 | 6 | 10 | 4 | 7.18 | 45.7 | 103.3 |
35 | 6 | 10 | 6 | 7.19 | 45.8 | 102.3 |
36 | 6 | 10 | 8 | 7.18 | 46.1 | 100.0 |
test | n | b | ||||
1 | 4 | 6 | 2 | 10.20 | 55.8 | 249.0 |
2 | 4 | 6 | 4 | 10.18 | 55.9 | 246.9 |
3 | 4 | 6 | 6 | 10.24 | 56.1 | 245.0 |
4 | 4 | 6 | 8 | 10.23 | 56.9 | 243.4 |
5 | 4 | 8 | 2 | 8.54 | 50.4 | 153.3 |
6 | 4 | 8 | 4 | 8.58 | 49.8 | 151.6 |
7 | 4 | 8 | 6 | 8.59 | 49.6 | 150.2 |
8 | 4 | 8 | 8 | 8.57 | 50.0 | 148.6 |
9 | 4 | 10 | 2 | 6.60 | 46.3 | 95.0 |
10 | 4 | 10 | 4 | 6.64 | 44.5 | 94.3 |
11 | 4 | 10 | 6 | 6.64 | 44.3 | 93.6 |
12 | 4 | 10 | 8 | 6.61 | 44.6 | 92.2 |
13 | 5 | 6 | 2 | 11.41 | 56.6 | 263.9 |
14 | 5 | 6 | 4 | 11.51 | 56.4 | 262.0 |
15 | 5 | 6 | 6 | 11.47 | 56.7 | 260.2 |
16 | 5 | 6 | 8 | 11.54 | 57.4 | 258.2 |
17 | 5 | 8 | 2 | 8.81 | 51.9 | 159.8 |
18 | 5 | 8 | 4 | 8.71 | 50.9 | 158.6 |
19 | 5 | 8 | 6 | 8.75 | 50.8 | 157.4 |
20 | 5 | 8 | 8 | 8.81 | 51.2 | 155.8 |
21 | 5 | 10 | 2 | 7.09 | 45.7 | 100.1 |
22 | 5 | 10 | 4 | 7.06 | 45.0 | 99.8 |
23 | 5 | 10 | 6 | 7.01 | 45.1 | 98.8 |
24 | 5 | 10 | 8 | 7.09 | 45.3 | 97.6 |
25 | 6 | 6 | 2 | 11.90 | 57.6 | 271.5 |
26 | 6 | 6 | 4 | 11.90 | 57.2 | 270.0 |
27 | 6 | 6 | 6 | 11.88 | 57.5 | 268.3 |
28 | 6 | 6 | 8 | 12.0 | 58.2 | 266.3 |
29 | 6 | 8 | 2 | 8.91 | 52.6 | 164.5 |
30 | 6 | 8 | 4 | 8.91 | 51.5 | 163.7 |
31 | 6 | 8 | 6 | 8.94 | 51.6 | 162.6 |
32 | 6 | 8 | 8 | 8.91 | 52.1 | 161.0 |
33 | 6 | 10 | 2 | 7.16 | 44.8 | 103.8 |
34 | 6 | 10 | 4 | 7.18 | 45.7 | 103.3 |
35 | 6 | 10 | 6 | 7.19 | 45.8 | 102.3 |
36 | 6 | 10 | 8 | 7.18 | 46.1 | 100.0 |
scheme | coe | optimal expected profit |
linear | 0 | 158.5 |
1 | -0.03 | 144.9 |
2 | -0.02 | 151.1 |
3 | -0.01 | 155.8 |
4 | 0.01 | 159.1 |
5 | 0.02 | 157.8 |
6 | 0.03 | 153.4 |
scheme | coe | optimal expected profit |
linear | 0 | 158.5 |
1 | -0.03 | 144.9 |
2 | -0.02 | 151.1 |
3 | -0.01 | 155.8 |
4 | 0.01 | 159.1 |
5 | 0.02 | 157.8 |
6 | 0.03 | 153.4 |
Distribution | ||
Condition for |
||
|
||
|
equation 4.11 | equation 4.11 |
|
equation 4.8 | equation 4.8 |
|
equation 4.9 | equation 4.10 |
Distribution | ||
Condition for |
||
|
||
|
equation 4.11 | equation 4.11 |
|
equation 4.8 | equation 4.8 |
|
equation 4.9 | equation 4.10 |
Distribution | ||
Condition that |
||
|
||
Exponential case | equation 5.8 | equation 5.8 |
|
equation 5.5 | equation 5.5 |
|
equation 5.6 | equation 5.7 |
Distribution | ||
Condition that |
||
|
||
Exponential case | equation 5.8 | equation 5.8 |
|
equation 5.5 | equation 5.5 |
|
equation 5.6 | equation 5.7 |
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