A multi-objective two-echelon newsvendor problem with limited budget and capacity

Document Type : Article

Authors

1 Department of Industrial Engineering, Faculty of Industrial and Mechanical Engineering, Qazvin Branch, Islamic Azad University, Qazvin, P.O. Box 34185-1416, Iran

2 Department of Industrial Engineering, Faculty of Engineering, Kharazmi University, Tehran, Iran

Abstract

In this paper, two-echelon newsvendor problem is considered. Many real-life situations like fashion, food industries, and healthcare services match newsvendor problem. Our problem is determining levels of inventory in order to optimize the profit and service level in selling a product. This product is made up of several raw materials. Only the distribution of demand is known, and the hot season of selling the product is just a short period and after that, the price of the product drops dramatically. The storage space and initial budget are limited. We modeled and solved the problem as an unconstrained nonlinear optimization problem using two nonlinear techniques, the sequential unconstrained minimization technique (SUMT) and steepest descent (SD).

Keywords


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